Saving Money With Solar Energy: Understanding the Technology and Economic Benefits for Self-Storage

When discussing the prospect of using solar energy at a self-storage site, most facility operators understand that it saves money. Where it gets complicated lies in understanding how it saves money.

This article explains the benefits of installing a solar-energy system in self-storage, helping owners determine if the choice is right for their operation. The benefits relate not only the technology itself, but to the way a facility operator pays for electricity, a facility’s connection with the utility, and the local and national incentives designed to encourage the adoption of solar energy.

The Basics

To understand what’s involved in a solar installation, you must first know how the system works. It’s made up of three basic components: the solar panels (modules), one or more inverters (depending on system design), and the racking system used to mount the panels.

The panels collect sunlight and create direct current (DC). The DC is transported to the inverter, where it’s converted to alternating current (AC). The electricity grid and everything attached to it operates on AC, which is transported to the facility’s main service panel and distributed to provide power wherever needed.

Power Charges

To better understand how solar energy benefits a commercial customer like a self-storage facility, you need to know how the utility companies charge for power. In most cases, the utility issues a demand charge and a kilowatt-hour (kWh) charge. The charge for the amount of power a customer needs at any point in time is called a demand charge. The utility will also charge for how much of that power the customer uses over time—a kWh charge.

Using solar panels will not reduce the amount of power a self-storage facility needs at any point, but it will reduce the number of kW hours purchased from the utility company. In the case of self-storage, the kWh charges can be a significant portion of facility’s bill, sometimes as much as 75 percent. This high proportion of kWh charges allows solar energy to have a significant positive impact on the bottom line.

Net Energy Metering

Net energy metering (NEM) is absolutely vital for solar to be an effective energy solution. NEM is a system that allows a utility customer to use the utility grid like a battery to “bank” kW hours when they’re not being used. Essentially, it allows the customer’s meter to run backward and build credit with the utility company. When the customer starts drawing again from the utility, it will first use its credit prior to incurring new charges.

NEM is widely used and, in some cases, mandated by state government. In fact, there are only three states that do not have some form of NEM available.

Being able to build credit with the utility allows a self-storage facility to mitigate its electric bill through solar power, even though the sun isn’t out all the time. When installing a solar array, a contractor will account for the ability to use NEM and design a system that produces more power than the facility needs at any one time to take advantage of banking kW hours.